Kim Jeong-kwan, the Minister of Trade, Industry and Energy, stated on October 22 that the priority during the implementation of the oil reserve swap system was to secure a stable supply of crude oil, despite criticisms regarding its insufficient price stabilization effects.
During a comprehensive audit of the Ministry and its affiliated agencies by the National Assembly's Trade, Industry, Energy, and Small and Medium Enterprises Committee, Minister Kim responded to a query from lawmaker Woo Jae-jun of the People Power Party, who pointed out that the government's management of oil reserves has been overly focused on securing quantities.
According to Woo, the government typically holds about 100 million barrels of oil reserves and lent approximately 30 million barrels to the private sector through the swap method during the Hormuz crisis. This process involved oil refiners purchasing alternative crude oil overseas and presenting shipping documents to borrow from the reserves.
Woo noted that while this approach helps maintain reserve levels, it limits the price stabilization function, as refiners must purchase expensive crude oil to borrow from the reserves during times of soaring prices.
In response, Minister Kim explained, "The most urgent issue at that time was the supply itself," emphasizing that the swap system was introduced to encourage refiners to secure crude oil from regions outside the Middle East. He added that the government also supported the freight costs necessary for importing non-Middle Eastern crude oil.
Woo urged the government to focus not only on the physical security of crude oil but also on reducing the burden of import costs.
Minister Kim indicated that they are also considering ways to reflect price changes in accordance with supply and demand conditions.
* This article has been translated by AI.
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